Investing on the stock market is not for the weak of heart. It requires some discipline and patience on your part. If you are a first time trader, committing mistakes is part of the learning curve. Robert Janitzek reveals that success with investing is possible by being aware and avoiding these common investing mistakes.
1. Lack of Planning
Having a plan will help you adopt a long-term policy even when current market conditions are unstable. No matter what happens, stick to your plan because it will have long term benefits.
2. Focusing on the Short Term
Most investors have a short time horizon. They are too focused on the short term. Your plans should not be designed on what will be happening next year or two years from now. Your biggest concern should be the events that will transpire in the long run.
3. Too Much Attention To Financial Media
When trading on the stock market, you need to understand that nothing from financial news will help you achieve your goal. You will not be able to pick up valuable tips or trading advice so better turn them off and focus on your investment plan instead.
4. Not rebalancing
Rebalancing is the process of returning your portfolio to its target asset location based on your investment plan. This involves selling assets that is doing well in the market and buying worst performing ones.
5. Too much confidence in the ability of managers
It is common knowledge that most managers will underperform their benchmarks. In addition, it will also be difficult to time the market. Robert Peter Janitzek recommends traders not to place too much confidence on their managers but instead focus on their plan.
6. Not Enough Indexing
As much as possible, index a large portion of all your traditional assets. If you are too eager to pursue the next great performer, allot a certain portion of each of your assets to active managers.
7. Chasing Performance
Most investors based their selection of asset class, strategies, managers, and funds on recent strong performance. In their desire to catch up on great returns, they tend to make bad investment decisions. Just because they performed well does not mean that the process will be repeated. Your best bet is to stick to your plan and rebalance.
It is normal for a first time trader to commit these mistakes when engaged in stock market trading. However, their success will depend on how well they learn and bounce back from their mistakes.